If your portfolio has so many holdings that it's nearly impossible to keep track of each one's performance, you're not alone. Many investors' portfolios are way more complicated (or expansive) than they need to be. They may include some accounts from prior jobs, a few holdover investments from the last hot trend, or multiple accounts for each spouse. Although diversification is an important tool in your portfolio plan, too much of it can get out of hand and doesn't really benefit you in the end; there are simpler alternatives that can generate similar results (with less paperwork).

Slide 3: Managing a Hands-Off Portfolio

Target-date funds are one option that can work for investors with an anticipated retirement date. A fund manager or company designs these all-in-one options around what they determine is the appropriate allocation of investments for your specific retirement date. The manager/company then adjusts the investments so they become more conservative the closer an investor is to retirement. Morningstar's Target-Date Fund Series reports go in depth on 20 of the most widely held target-date fund series.

Although target-date funds have their positives, there are some concerns, as evidenced by the drop in value for many such funds during the 2008 financial crisis. For example, some funds geared toward near-retirement investors arguably had too many stock holdings, which were hit hard during the downturn. Additionally, many target-date offerings are funds of funds run by a single company, which may not be best of breed across the board. It's best to do your homework to find target-date managers with access to a strong, low-cost roster of domestic stock, international stock, and bond funds as well as a glide path (i.e., asset allocation strategy) that you are comfortable with. Vanguard and T. Rowe Price target-date offerings are among our favorites.

If you want to have more flexibility in your allocation, but also keep costs low and minimize your oversight, index funds may be a good alternative for you. These funds simply seek to match the return of a market index by holding the same securities contained in that index (or a representative sample in the case of bond funds). Because of their passive strategy, most index funds have lower costs, a strong advantage that has made them quite competitive with actively managed funds over time.

Also, because an index fund's strategy is straightforward, a manager change is typically less of a concern for an index fund versus an actively managed fund that depends on a star stock-picker.

Index funds are a good option for those who want a simplified but diversified portfolio; a single broadly based index fund can provide exposure to virtually the entire stock or bond market, thus enabling a portfolio compilation of only a few low-maintenance funds. And for investors in taxable accounts, index mutual funds, and especially exchange-traded funds (due to their unique structure), tend to be very tax efficient, which means less time and money spent on keeping the taxman at bay.

Although constructing a portfolio yourself will require you to be attentive to your asset allocations, this chart can help you find an allocation that is right for you if you're unsure where to start.

Slide 7: Managing a Hands-Off Portfolio

A third option is creating a portfolio with both index funds and some topnotch actively managed funds, or a portfolio composed entirely of actively managed funds. Morningstar's Fund Analyst Picks provides a comprehensive list of our favorites, including both types of funds. It's up to the investor what mix of active/index to choose, but during the recent downturn, active managers with value-oriented strategies, on average, beat their benchmarks, while growth-oriented managers had a more difficult time. But the results tend to change depending on the time period you examine. Though their strategies may move in and out of favor or take time to play out, some active managers have certainly proven a keen ability to add value over time, and delegating investment responsibility to the best of them allows you to be more hands-off.